How does USAA process diminution of value claims?

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The United Services Automobile Association uses a specialized method based on a formula dubbed 17c to compute diminution of value claims, according to the Diminished Value of Georgia. During the process of computing the value of these types of claims, the insurer utilizes a tool known as the Evaluation Guideline Worksheet.

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The first step of the 17c formula involves computing the value of the vehicle in question, states the Kielich Law Firm. The vast majority of insurance companies utilize the National Automobile Dealers Association price guidelines for this step. While the valuations correctly adjust prices for equipment and mileage, they make no provision for geographical variations in vehicle prices. For instance, cars typically fetch higher prices in wealthier locales than in poorer ones.

The second step of the 17c formula involves adjusting the applicable National Automobile Dealers Association price with a modifier for base loss of value, explains the Kielich Law Firm. The next steps involve multiplying the product with damage and mileage modifiers and then aggregating the result to determine the applicable valuation.

The Evaluation Guideline Worksheet utilizes a variation of this formula to compute valuations, notes the Diminished Value of Georgia. For the first step, the tool uses vehicle prices from the National Automobile Dealers Association, the Kelly Blue Book and other approved sources. The tool multiplies these prices with modifiers for prior damage, current damage, mileage and title status to determine the final vehicle value.

For reasons such as the use of arbitrary modifiers; reliance on vehicle valuations that fail to adjust for geographical variations in prices; and USAA's failure to provide the appraisal reports it uses to compute awards, the diminution of value claims process remains controversial, argues the Diminished Value of Georgia.